Full Press Release Details
Intrexon Announces Third Quarter 2018 Financial Results
Quarterly GAAP revenues of $32.4 million and net loss attributable to Intrexon of $57.3 million
including non-cash charges of $38.7 million
Adjusted EBITDA of $(28.9) million
GERMANTOWN, MD, November 8, 2018 Intrexon Corporation (NASDAQ: XON), a leader in the engineering and industrialization
of biology to improve the quality of life and health of the planet, today announced its third quarter financial results for 2018.
Recent Technical/Business Achievements:
Recent Corporate Highlights:
Third Quarter 2018 Financial Highlights:
Year-to-Date 2018 Financial Highlights:
Our company is transitioning from one with great science and technology to one with great products and product candidates that embody our engineered
biology, commented Randal J. Kirk, Chairman and Chief Executive Officer of Intrexon. Recognizing our requirements, we are fully occupied on the development of systems, teams and plans to successfully commercialize products that we
believe will be transformative in their fields.
Mr. Kirk concluded, While we do not underestimate the challenges that face us or
anyone in making such a transition, we have persevered in the execution of our plans laid long ago and believe that we are seeing the fruits of our prior labors. It long has been our goal to create one of the truly great companies in the
world and all of us at intrexon are excited to be where we are today and looking with great anticipation toward our future.
Financial Results Compared to Prior Year Period
Total revenues decreased $13.6 million, or 30%, from the quarter ended September 30, 2017.
Collaboration and licensing revenues decreased $13.8 million from the quarter ended September 30, 2017 due to (i) a decrease in research and development services for certain of the Company s exclusive channel collaborations, or
ECCs, as the Company redeployed certain resources towards supporting prospective new platforms and partnering opportunities and began to focus more on the further development of relationships and structures that provide the Company with more control
and ownership over the development process and commercialization path, (ii) a decrease in research and development services for certain of the Company s ECCs as a result of program progression where the Company s collaborators have
taken responsibility of the execution of the programs, (iii) changes in revenue recognition for upfront and milestone payments under the new Accounting Standards Codification 606, or ASC 606, revenue standard whereby revenues are recognized
based on the amount of services the Company performs for its collaborators, and (iv) the mutual termination of the Company s second ECC with ZIOPHARM for the treatment of graft-versus-host disease in December 2017. Gross margin on products
declined in the current period as a result of increased operating costs associated with new product offerings and cloned products. Gross margin on services improved in the current period as a result of pricing changes and an increase in the number
of embryos produced per bovine in vitro fertilization cycle due to improved production results.
Research and development expenses increased
$8.4 million, or 23%, and include $8.7 million expense related to in-process research and development reacquired as part of an asset acquisition in September 2018. Although selling, general and
administrative (SG&A) expenses were consistent period over period, legal and professional fees decreased $2.9 million primarily due to a decline in the use of regulatory and other consultants. This decrease was offset primarily by higher
compensation expenses related to performance and retention incentives for SG&A employees.
Year-to-Date 2018 Financial Results Compared to Prior Year Period
Total revenues decreased
$36.6 million, or 24%, from the nine months ended September 30, 2017. Collaboration and licensing revenues decreased $37.8 million from the nine months ended September 30, 2017 primarily due to (i) a decrease in research and
development services for certain of the Company s ECCs as the Company redeployed certain resources towards supporting prospective new platforms and partnering opportunities and began to focus more on the further development of relationships and
structures that provide the Company with more control and ownership over the development process and commercialization path, (ii) a decrease in research and development services for certain of the Company s ECCs as a result of program
progression where the Company s collaborators have taken responsibility of the execution of the programs, (iii) changes in revenue
recognition for upfront and milestone payments under the new ASC 606 revenue standard whereby revenues are recognized based on the amount of services the Company performs for its collaborators,
and (iv) the mutual termination of the Company s second ECC with ZIOPHARM for the treatment of graft-versus-host disease in December 2017. Product revenues decreased $2.2 million or 9% primarily due to lower customer demand for live
calves, cows previously used in production, and cloned products. These decreases were partially offset by increased customer demand for pregnant recipients. Gross margin on products declined in the current period as a result of lower product sales
and increased operating costs associated with new product offerings and cloned products. The increase in service revenues of $2.5 million, or 7%, as well as the gross margin thereon relates to pricing changes and an increase in the number of
embryos produced per bovine in vitro fertilization cycle due to improved production results.
Research and development expenses increased
$19.4 million, or 19%, and include (i) $8.7 million expense related to in-process research and development reacquired as part of an asset acquisition in September 2018 and (ii) $5.3 million of one-time costs associated with closing one of Oxitec s Brazilian subsidiary s leased research and development facilities as the Company decentralized operations previously conducted in this facility.
Research and development consultants and lab supplies increased $3.1 million primarily due to increased expenses from contract research organizations and consultants providing services for both programs being developed internally and pursuant
to some of the Company s collaborations. Depreciation and amortization increased $2.1 million primarily as a result of the depreciation expense on research and development assets and amortization of developed technology acquired from
GenVec, Inc. in June 2017. Although SG&A expenses were consistent period over period, legal and professional fees decreased $7.5 million primarily due to decreased legal fees associated with ongoing litigation and decreased fees incurred
for regulatory and other consultants. This decrease was offset by an increase of $6.9 million in compensation expenses related to performance and retention incentives for SG&A employees.
Conference Call and Webcast
The Company will host a
conference call today Thursday, November 8th, at 5:30 PM ET to discuss the third quarter 2018 financial results and provide a general business update. The conference call may be accessed by
dialing 1-888-317-6003 (Domestic US), 1-866-284-3684 (Canada), and 1-412-317-6061 (International) and providing the
number 8225818 to join the Intrexon Corporation Call. Participants may also access the live webcast through Intrexon s website in the Investors section at http://investors.dna.com/events.
About Intrexon Corporation
Intrexon Corporation (NASDAQ:
XON) is Powering the Bioindustrial Revolution with Better DNA to create biologically-based products that improve the quality of life and the health of the planet. Intrexon s integrated
technology suite provides its partners across diverse markets with industrial-scale design and development of complex biological systems delivering unprecedented control, quality, function, and performance of living cells. We call our synthetic
Non-GAAP Financial Measures
This press release presents Adjusted EBITDA and Adjusted EBITDA per share, which are non-GAAP financial measures within
the meaning of applicable rules and regulations of the Securities and Exchange Commission (SEC). For a reconciliation of these measures to the most directly comparable financial measure calculated in accordance with generally accepted accounting
principles and for a discussion of the reasons why the company believes that these non-GAAP financial measures provide information that is useful to investors see the tables below under Reconciliation of
GAAP to Non-GAAP Measures. Such information is provided as additional information, not as an alternative to Intrexon s consolidated financial statements presented in accordance with GAAP, and is
intended to enhance an overall understanding of the Intrexon s current financial performance.
Intrexon, Arctic, Botticelli, Friendly, Powering the Bioindustrial Revolution with Better DNA, and Better DNA are trademarks of Intrexon and/or its affiliates.
Other names may be trademarks of their respective owners.
Safe Harbor Statement
Some of the statements made in this press release are forward-looking statements that involve a number of risks and uncertainties and are made pursuant to the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements made in this press release include, but are not limited to, statements regarding clinical and
pre-clinical development activities by Intrexon and its collaborators, commercial and business development plans and the submission of regulatory filings. These forward-looking statements are based upon
Intrexon s current expectations and projections about future events and generally relate to Intrexon s plans, objectives and expectations for the development of Intrexon s business. Although management believes that the plans and
objectives reflected in or suggested by these forward-looking statements are reasonable, all forward-looking statements involve risks and uncertainties and actual future results may be materially different from the plans, objectives and expectations
expressed in this press release. These risks and uncertainties include, but are not limited to, (i) Intrexon s strategy and overall approach to its business model, including its ability to successfully enter into optimal strategic
relationships with its subsidiaries and operating companies that Intrexon may form in the future; (ii) Intrexon s ability to successfully enter new markets or develop additional products, whether with its collaborators or independently;
(iii) actual or anticipated variations in Intrexon s operating results; (iv) actual or anticipated fluctuations in Intrexon s competitors or its collaborators operating results or changes in their respective growth
rates; (v) Intrexon s cash position; (vi) market conditions in Intrexon s industry; (vii) the volatility of Intrexon s stock price; (viii) Intrexon s ability, and the ability of its collaborators, to protect
Intrexon s intellectual property and other proprietary rights and technologies; (ix) Intrexon s ability, and the ability of its collaborators, to adapt to changes in laws or regulations and policies; (x) the outcomes of pending
or future litigation; (xi) the rate and degree of market acceptance of any products developed by a collaborator under an ECC or through a joint venture; (xii) Intrexon s ability to retain and recruit key personnel;
(xiii) Intrexon s expectations related to the use of proceeds from its public offerings and other financing efforts; (xiv) Intrexon s estimates regarding expenses, future revenue, capital requirements and needs for additional
financing; and (xv) Intrexon s expectations relating to its subsidiaries and other affiliates. For a discussion of other risks and uncertainties, and other important factors, any of which could cause Intrexon s actual results to
differ from those contained in the forward-looking statements, see the section entitled Risk Factors in Intrexon s Annual Report on Form 10-K, as well as discussions of potential risks,
uncertainties, and other important factors in Intrexon s subsequent filings with the Securities and Exchange Commission. All information in this press release is as of the date of the release, and Intrexon undertakes no duty to update this
information unless required by law.
For more information regarding Intrexon Corporation, contact:
Intrexon Corporation and Subsidiaries
Consolidated Balance Sheets
| (Amounts in thousands) | September 30, 2018 | December 31, 2017 | ||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 82,417 | $ | 68,111 | ||||
| Restricted cash | 6,987 | 6,987 | ||||||
| Short-term investments | 164,162 | 6,273 | ||||||
| Equity securities | 714 | 5,285 | ||||||
| Receivables | ||||||||
| Trade, net | 18,161 | 19,775 | ||||||
| Related parties, net | 8,841 | 17,913 | ||||||
| Other | 3,305 | 2,153 | ||||||
| Inventory | 18,294 | 20,493 | ||||||
| Prepaid expenses and other | 7,589 | 7,057 | ||||||
| Total current assets | 310,470 | 154,047 | ||||||
| Equity securities, noncurrent | 3,983 | 9,815 | ||||||
| Investments in preferred stock | 158,421 | 161,225 | ||||||
| Property, plant and equipment, net | 122,707 | 112,674 | ||||||
| Intangible assets, net | 213,244 | 232,877 | ||||||
| Goodwill | 151,276 | 153,289 | ||||||
| Investments in affiliates | 17,944 | 18,870 | ||||||
| Other assets | 2,370 | 4,054 | ||||||
| Total assets | $ | 980,415 | $ | 846,851 | ||||
| Current liabilities | ||||||||
| Accounts payable | $ | 8,522 | $ | 8,701 | ||||
| Accrued compensation and benefits | 23,885 | 6,474 | ||||||
| Other accrued liabilities | 20,998 | 21,080 | ||||||
| Deferred revenue | 38,036 | 42,870 | ||||||
| Lines of credit | 200 | 233 | ||||||
| Current portion of long-term debt | 546 | 502 | ||||||
| Related party payables | 143 | 313 | ||||||
| Total current liabilities | 92,330 | 80,173 | ||||||
| Long-term debt, net of current portion | 183,133 | 7,535 | ||||||
| Deferred revenue, net of current portion | 136,942 | 193,527 | ||||||
| Deferred tax liabilities, net | 9,363 | 15,620 | ||||||
| Other long-term liabilities | 3,204 | 3,451 | ||||||
| Total liabilities | 424,972 | 300,306 | ||||||
| Commitments and contingencies | ||||||||
| Total equity | ||||||||
| Common stock | ||||||||
| Additional paid-in capital | 1,552,379 | 1,397,005 | ||||||
| Accumulated deficit | (990,080 | ) | (847,820 | ) | ||||
| Accumulated other comprehensive loss | (22,900 | ) | (15,554 | ) | ||||
| Total Intrexon shareholders equity | 539,399 | 533,631 | ||||||
| Noncontrolling interests | 16,044 | 12,914 | ||||||
| Total equity | 555,443 | 546,545 | ||||||
| Total liabilities and total equity | $ | 980,415 | $ | 846,851 |
Intrexon Corporation and Subsidiaries
Consolidated Statements of Operations
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| (Amounts in thousands, except share and per share data) | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues | ||||||||||||||||
| Collaboration and licensing revenues | $ | 14,324 | $ | 28,155 | $ | 51,622 | $ | 89,384 | ||||||||
| Product revenues | 6,829 | 7,670 | 23,549 | 25,780 | ||||||||||||
| Service revenues | 10,414 | 9,975 | 40,379 | 37,890 | ||||||||||||
| Other revenues | 881 | 216 | 1,839 | 899 | ||||||||||||
| Total revenues | 32,448 | 46,016 | 117,389 | 153,953 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Cost of products | 8,877 | 8,001 | 28,046 | 25,625 | ||||||||||||
| Cost of services | 6,449 | 7,013 | 21,127 | 21,805 | ||||||||||||
| Research and development | 44,885 | 36,472 | 124,072 | 104,663 | ||||||||||||
| Selling, general and administrative | 38,708 | 39,277 | 112,872 | 113,258 | ||||||||||||
| Total operating expenses | 98,919 | 90,763 | 286,117 | 265,351 | ||||||||||||
| Operating loss | (66,471 | ) | (44,747 | ) | (168,728 | ) | (111,398 | ) | ||||||||
| Other Income (Expense), Net | ||||||||||||||||
| Unrealized and realized appreciation (depreciation) in fair value of equity securities and preferred stock, net | (7,287 | ) | 2,175 | (27,565 | ) | 9,240 | ||||||||||
| Interest expense | (3,999 | ) | (138 | ) | (4,240 | ) | (498 | ) | ||||||||
| Interest and dividend income | 6,107 | 5,070 | 17,323 | 14,437 | ||||||||||||
| Other income (expense), net | 1,452 | (1,021 | ) | 571 | 4,453 | |||||||||||
| Total other income (expense), net | (3,727 | ) | 6,086 | (13,911 | ) | 27,632 | ||||||||||
| Equity in net loss of affiliates | (2,870 | ) | (2,993 | ) | (9,880 | ) | (11,273 | ) | ||||||||
| Loss before income taxes | (73,068 | ) | (41,654 | ) | (192,519 | ) | (95,039 | ) | ||||||||
| Income tax benefit | 14,322 | 818 | 19,535 | 2,164 | ||||||||||||
| Net loss | $ | (58,746 | ) | $ | (40,836 | ) | $ | (172,984 | ) | $ | (92,875 | ) | ||||
| Net loss attributable to the noncontrolling interests | 1,422 | 1,147 | 4,113 | 3,123 | ||||||||||||
| Net loss attributable to Intrexon | $ | (57,324 | ) | $ | (39,689 | ) | $ | (168,871 | ) | $ | (89,752 | ) | ||||
| Net loss attributable to Intrexon per share, basic and diluted | $ | (0.44 | ) | $ | (0.33 | ) | $ | (1.31 | ) | $ | (0.75 | ) | ||||
| Weighted average shares outstanding, basic and diluted | 129,518,989 | 120,518,885 | 128,843,991 | 119,741,291 |
Intrexon Corporation and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Adjusted EBITDA per share. To supplement Intrexon s financial information presented in accordance with U.S. generally accepted accounting principles ( GAAP ), Intrexon presents Adjusted EBITDA and Adjusted EBITDA per share. A
reconciliation of Adjusted EBITDA to net income or loss attributable to Intrexon under GAAP appears below. Adjusted EBITDA is a non-GAAP financial measure that Intrexon calculates as net income or loss
attributable to Intrexon adjusted for income tax expense or benefit, interest expense, depreciation and amortization, stock-based compensation, shares issued as compensation for services, impairment loss, expense for
in-process research and development acquired in an asset acquisition, bad debt expense, litigation expense, realized and unrealized appreciation or depreciation in the fair value of equity securities and
preferred stock, and equity in net loss of affiliates. Adjusted EBITDA and Adjusted EBITDA per share are key metrics for Intrexon s management and Board of Directors for evaluating the Company s financial and operating performance,
generating future operating plans and making strategic decisions about the allocation of capital. Intrexon s management and Board of Directors believe that Adjusted EBITDA and Adjusted EBITDA per share are useful to understand the long-term
performance of Intrexon s core business and facilitate comparisons of the Company s operating results over multiple reporting periods. Intrexon is providing this information to investors and others to assist them in understanding and
evaluating the Company s operating results in a manner similar to how its management and Board of Directors evaluate operating results (except for the impact of the change in deferred revenue related to upfront and milestone payments, which is
adjusted in the measures evaluated by management and the Board of Directors as discussed below). While Intrexon believes that its non-GAAP financial measures are useful in evaluating its business, and may be
of use to investors, this information should be considered supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP
financial measures may not be the same as non-GAAP financial measures presented by other companies. Adjusted EBITDA and Adjusted EBITDA per share are not measures of financial performance under GAAP, and are